Automobile chip shortage disrupts automobile production in China and propels local suppliers

来源:爱集微 #JW# #Insights#
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Editing by WM Zhang and Greg Gao

The global automotive-chip shortage also disrupts China's automobile production, causing several carmakers in China to halt production or even shut down in early April.  According to industry prediction, the situation will remain severe for Q2 this year. This shortage provides new impetus to some domestic suppliers that have tried to break into this market dominated by international players. Industry leaders and experts call for increasing financial subsidies and formulating industry standards to help China achieve self-sufficiency in automotive chips in the long run.

The press reports that most of the major carmakers in China suffered a drop in vehicle production, including Geely, SAIC-Volkswagen Automotive, Changan Auto. Chinese electric car startup NIO suspended production for five days in late March because of a semiconductor shortage. In early April, Shanghai Volkswagen also announced plans for a production halt.  

According to data from the China Association of Automobile Manufacturers (CAAM), China's automobile production and sales reached 1.503 million and 1.455 million in February 2021, down 37.1% and 41.9% from the previous month.

The cause for the IC shortage of Chinese automobile manufacturers is more or less the same as in other countries. The sudden outbreak of the COVID-19 pandemic caught Chinese automakers off guard, with insufficient stocks. Then came the new demands for more digital devices such as PCs and from the rollout of 5G services in the COVID-19 lockdown and back-to-business period. Panic stockpiling of the chips by manufacturers and distributors creates further market shortages. The increase of more electric vehicles also contributes to more underestimated purchasing of the chips, said Investor Alice Sun from Xiaomi

Xin Guobin, deputy minister of the Ministry of Industry and Information Technology (MIIT), told the press," The recent shortage of automotive chips is not only a global common problem but also reflects China's deep-seated independent supply capacity insufficiency. It is related to the core competitiveness of the industry." The Chinese automobile manufacturers rely highly on imports for the ICs they use, with some famous brands having to use as much 92%,said another industry observer.

The dominant suppliers for the automobile MCUs in China are NXP, Renesas, Microchip, Infineon, and ST. In recent years domestic MCU suppliers have been trying to break into this market with limited success. At the recently held electronica show in Shanghai, several indigenous MCU companies told JW Insights that their businesses are good with products being adopted by local manufacturers.

One of the best examples for Chinese local automobile MCU suppliers is Shanghai ChipON Micro-Electronic Co., Ltd. (芯旺微). Unique about this Shanghai-based design house is that it focuses on the 8-bit MCU and 32-bit MCU&DSP for automobile and industrial applications with its own independent IP KungFu kernel architecture.

Launched in 2009, the company has developed complete KungFu MCUs with developing, simulation, and programming tools. In 2020, it experienced explosive growth with its 32-bit MCUs. The company has cumulatively shipped over 700 million units to top-tier OEMs globally and in China. Its client list includes major automobile manufacturers. Last month it completed a series B funding. A senior ChipOn executive said it could still deliver products on time to its clients under current capacity pressure.

The challenges for China's overall automobile semiconductor industry are daunting. Several industry heavyweight delegates to the National People's Congress in mid-March offered proposals for strengthening the sector. Chen Hong, chairman of SAIC Group (上汽集团), said that it takes "top-level design" for decision making to achieve a real transformation for the industry. SAIC Group is the largest listed automobile company in China based in Shanghai.

Zhang Qiang, Chairman of Nanjing Semidrive Technology Ltd., a company specializing in automotive SoC in China, emphasized increasing financial subsidies for automotive chip design companies and formulating related industry standards.

Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers, said he believed in the more integrated development of the industry with various parties to work together.  

On April 17, HDSC (华大半导体) announced that it formed a joint lab in Shanghai with the Technology Center of Dongfeng Motor Corporation(DFMC东风汽车集团) dedicated to automobile semiconductors. Both HDSC and DFMC are large-scale state-owned enterprises. HDSC has a MUC subsidiary, and reports say it intends to get it listed.

According to industry observers, China might have another new opportunity to catch up in automobile chips through new energy vehicles, autonomous driving, and intelligent vehicle networks, which require a new set of technologies and products, including faster SoC. Chinese auto companies and new startups have moved into this area or are "racing track" in a recently popular term in China's semiconductor industry. In May 2020, BAIC Capital (北汽产投) and the Imagination Technologies formed a joint venture (北京核芯达科技有限公司) to design applied processors and voice interaction chips for automatic driving. BAIC Capital is affiliated with BAIC (Beijing Automotive Group), the largest automobile manufacturer in Beijing with several prominent brands under it.  

In addition, other manufacturers and AI-chip companies have also deployed in this area. They include SAIC (上汽), Changan (长安), BYD (比亚迪) and Geely (吉利), Horizon (地平线), Cambricon(寒武纪), Black Sesame(黑芝麻). 

责编: 张未名
来源:爱集微 #JW# #Insights#
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